One of the UK’s largest investment trusts, in my opinion Scottish Mortgage is famous for two things: its holdings – Tesla, Amazon and Alibaba to name but a few stellar US tech stocks – and the c.365% rise in its shares over the past five years. However, sadly not for its dividend of 0.3%, according to the latest ‘divided heroes’ table from the Association of Investment Companies (AIC).

So, if I’m looking for a bigger dividend, should I turn to Scottish Mortgage’s peers in the Global Sector? I will indeed, as I look to expand my SIPP portfolio!

Several of Scottish Mortgage’s peers in the Global sector deliver a far better dividend. For example, Scottish Investment Trust (LSE: SCIN), which has a substantial 3.2% yield at the time of writing, or Witan Investment Trust (LSE: WTAN) which has a yield of 2.4%. Both offer a marginally better dividend than Scottish Mortgage, but their shares’ performance has varied over a five-year period. A rise of over 43.5% over a five-year period is pretty healthy for Witan Investment Trust’s share price, and Scottish Investment’s shares have risen a modest 22% in the past five years.

Witan Investment Trust is less technology focused compared to Scottish Mortgage Investment Trust, preferring to focus on stalwarts like Tesco and Unilever. Scottish Investment Trust’s holdings focus on different companies, like US banking giant Wells Fargo and UK telecoms leviathan BT.

Scottish Investment Trust’s objective is to “provide long-term above average returns through a diversified portfolio of international equities and to achieve dividend growth ahead of UK inflation”. Meanwhile, Witan’s objective is to “achieve an investment total return exceeding that of the benchmark of the Company over the longer term, together with growth in the dividend ahead of inflation through active investment in global equities”.

Both Witan and Scottish Investment Trust are very much investments for the long term, with both companies looking to achieve dividend growth ahead of inflation, which is more than can be said for their peer Scottish Mortgage Investment Trust.

Although Scottish Mortgage has succeeded in an impressive share price increase over the years, it has recently been knocked back due to the volatility of Tesla’s and Amazon’s shares which forms a significant part of its holdings – a weighting of 8.89% for Tesla and a weighting of 6.55% for Amazon. This volatility might be repeated in the future.

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The trust with big holdings in gold majors

One way is through the Scottish Investment Trust (LSE: SCIN). Its top three holdings are all gold miners. These are Newmont, Barrick Gold and Newcrest Mining. The former is the world’s largest gold miner and has recently exceeded analyst expectations with its results that were massively up. This was due to the higher gold price. Barrick and Newcrest are also major players, so the Scottish Investment Trust gives you an investor a stake in some very cash generative, profitable miners.

Another upside is, of course, that as a trust, it’s not just miners you get exposure to. It invests in other good companies on a global basis, some of which are large FTSE 100 names like Tesco and BT. Therefore, investing in it is (in my view) less risky, but it’s also slightly less tied to the price of gold.

Tracking the commodity price

If you want to be more in sync with the rising price of gold, then a gold ETF, or ETC, might be a preferable investment. These will track the price of the commodity and the charges are often very cheap, which is a benefit. There are many to pick from but examples include Invesco Physical Gold ETC and iShares MSCI Global Gold Miners ETF.

I’d suggest only buying gold using this method if you are very confident of a rising gold price. It doesn’t offer any diversification as a method for gaining exposure to the gold price. Historically, like most commodities, the price has tended to fluctuate. In the short term though, if analyst predictions are right (which is a big ‘if’) then this could be a good way of directly tracking the price of gold.

Investing in gold diggers

If you prefer to own an individual miner then I’d suggest looking at Centamin (LSE: CEY) or Greatland Gold (LSE: GGP). The former is a FTSE 250 miner with its main asset being in Egypt. It mines about 480,000 oz of gold. The shares have become much more expensive versus their historic figures, as a result of more investors wanting to own gold miners.

Greatland Gold is an AIM company. The business has been listed since 2006 but its mining is in Australia. It has relationships with big players such as Newmont, which could become very valuable in the future. Its projects are mainly early stage and so this is a more speculative way to invest in gold, in my opinion.

Investing in gold isn’t easy, but I believe these are some of the best ways to do it. 

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Following this performance, investors may be interested in buying gold ahead of further gains. However, owning the precious metal itself may not be the best way to profit from its price performance. 

As such, investors may be better off buying gold mining stocks instead. 

Invest in the gold price 

Buying gold can be a complicated process. Acquiring the physical metal can be expensive, and there are usually high storage costs involved. Products such as ETFs are an alternative, but these can also come with high management charges.

What’s more, there’s no guarantee of profits. If the price of the metal falls, the value of your investment will drop as well. 

On the other hand, mining stocks offer the best of both worlds. Even if the price of gold falls substantially from current levels, many of these miners will still earn a profit. If it continues to rise, their profit margins will grow. 

And unlike physical gold, which usually costs money to store, most mining stocks offer a dividend. This provides an income stream for investors. 

Still, despite the favourable properties of mining stocks over the metal itself, it can be tough picking the right stocks to buy. That’s where the Scottish Investment Trust (LSE: SCIN) can help. 

Investment trust benefits

The managers of Scottish have allocated a significant percentage of the investment trust’s portfolio to gold mining companies. Companies such as Newcrest Mining Limited, Newmont Corp and Barrick Gold Inc. Together these stocks make up around 15% of the firm’s portfolio. 

Scottish owns other investments alongside these gold price plays. The rest of the portfolio is devoted to defensive equities, which can provide a steady income in uncertain times. These include pharmaceutical businesses, telecoms groups and utilities. 

This approach provides investors with the best of both worlds. If the price of gold continues to increase, Scottish’s mining investments will lead to profits for investors. However, if the price of the yellow metal starts to fall, and the rest of the market rises, its other holdings will make up the difference. 

And even if the market goes nowhere fast, investors should profit. Scottish has a preference for dividend stocks. As a result, the investment trust currently supports a dividend yield of 3%. So, even if the share price of the firm goes nowhere for the next few years, investors will be paid to wait. The same can’t be said for the gold price.

As such, if you are looking to profit from the gold price surge, it may be a good idea to snap up some shares of Scottish. The trust’s diversified nature and the dividend may generate high total returns for investors in the long run. 

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The trust that runs against the pack

Scottish Investment Trust (LSE: SCIN) is one such investment trust. The contrarian approach of the managers means the trust is risky but has plenty of potential for growth.

The trust has massively upped its stake in gold, with the top holdings including Newmont and Barrick Gold. Top holdings from the UK include defensive shares such as United Utilities, GlaxoSmithKline, and Tesco. If you think difficult times lie ahead then this could be a good trust to own.

In a blog in June, the manager said: “Governments now seem determined to create growth and, we suspect, will show increasingly greater tolerance for inflation. This would be a favourable backdrop for a contrarian investor.”

A dividend yield of 3% is steady if unspectacular. In these challenging times, I’d see that as a win if it can be sustained.

I also think there’s a margin of safety in buying the shares right now, as they are trading at a discount of around 11% to net asset value. The shares seem to have the potential to provide both income and growth.

A very different type of trust

Baillie Gifford US Growth Trust (LSE: USA) is a very different kettle of fish. Managed by Baillie Gifford – an investment outfit that is a big backer of Tesla – it unsurprisingly focuses on highly rated US stocks. It also has a strong tech slant to it.

Top holdings currently include the likes of Shopify, Amazon, Tesla, and Wayfair. Amazon’s price-to-earnings is over 100, which is astronomical, but it would be brave to bet against the shares right now and against the company continuing to grow. This is why I think investors are piling directly into the shares and also into trusts and funds that are holders of the shares. Technology has been one of the winners from the pandemic.

The Baillie Gifford US Growth Trust’s share price reflects this excitement, so it’s hardly a hidden gem. So far this year, the shares have risen by 60%. I think they could go further. The shares don’t pay a dividend and trade at a premium to the net asset value, so in some ways are riskier for investors. To invest you’d need to be confident that US tech companies will keep growing strongly.

Scottish and Baillie Gifford US Growth Trust are very different trusts in many ways, but I think they complement each other well. The manager styles are complete contrasts, and yet both have done well since the stock market lows of March. As such I think both these investment trusts are ideal for growth.

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A very cheap global miner

Rio Tinto (LSE: RIO) is one of the world’s leading mining companies. It’s worth over £45bn, even after the recent market declines. Investing in a miner wouldn’t be everyone’s cup of tea. The sector is also highly cyclical so if shares fall further it could be hit harder than most in the short term.

But there are reasons to add it to a Stocks and Shares ISA. These reasons include a price-to-earnings ration below eight on a trailing basis. For now, the company is still scheduled to pay dividends.

The group has been reducing debt, which has put it in a better position than it was last time commodity prices fell.

China a major consumer of iron ore, which is Rio’s main product. As China is seemingly recovering from coronavirus, demand might not dry up to quite the extent which might have been expected just a few weeks ago.

Dividends suspended

Barclays (LSE: BARC) shares are offering a fantastic combination of value and growth potential. But first it has to come through this current crisis which has forced it to scrap its dividend, along with other banks.

Given the banks have been building up capital in recent years it’s doubtful this will be a problem, provided COVID-19 doesn’t shut down the economy completely.

Assuming the economy bounces back this year, the shares at a P/E below five are incredibly cheap. It’s hard to remember a time Barclays had a P/E anywhere near this low. Indeed, the shares at 10-year lows. That’s despite Barclays performing well financially before the virus hit. In 2019 it made £4.4bn of pre-tax profit.

Its diversification, as both a retail and investment bank, should also help see it through these rocky times where interest rates have been slashed and debt is rising. I think it’s a good one for the ISA.

The value trust that’s gone defensive

The manager of investment trust Scottish Investment Trust (LSE: SCIN) has reacted quickly to the changes brought about by coronavirus. Last month he sold a number of consumer stocks, retailers, banks and oil services companies – including Gap, Macy’s, M&S, and banks ING and BNP Paribas.

The trust owns a number of overseas stocks. In the top 10 holdings from the UK are defensive, lowly valued shares such as Tesco, BT, and United Utilities.

The trust has £100m of borrowings it will use to scoop up other shares it wants to own.

It remains to be seen whether the strategy of shifting the portfolio to meet the challenge posed by COVID-19 will work well for the trust’s investors. But it’s trading at a discount to its true value. It also has a great record of paying out dividends to shareholders. With dividends being cut left, right, and centre, it’s a share I’d want to pop in an ISA.

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This is a challenging environment for investors to navigate. However, there are a couple of funds that stand out right now as safe harbours in rough waters.

Personal Assets Trust

The Personal Assets Trust (LSE: PNL) is a relatively unique investment trust. Its goal is to protect and grow the wealth of its investors over the long term. Management places emphasis on the protection part of its investment mandate.

As such, inflation-linked bonds and precious metals feature heavily in the trust’s portfolio. Commodities and fixed income securities currently make up more than two-thirds of the collection. The trust also owns a selection of high-quality blue-chip stocks.

If you’re looking for an investment fund that’s trying to beat the stock market, Personal Assets isn’t for you. However, if you’re looking to protect and grow your wealth, it could be worth considering.

Over the past 10 years, it’s achieved an average annualised return of 5.8%, with relatively minimal volatility.

A dividend yield of 1.3% provides a level of income that exceeds most savings accounts, and an annual management fee of 0.65% is relatively low.

Scottish Investment Trust

The Scottish Investment Trust (LSE: SCIN) is another trust that’s structured to outperform in all market environments, billing itself as a contrarian investor. It likes to buy out-of-favour stocks, which are in the process of restructuring. It also aims to provide dividend growth ahead of UK inflation.

Research shows value stocks tend to outperform in volatile markets. Meanwhile, growth stocks suffer the most as investors usually rush to sell these holdings first. This suggests Scottish could produce market-beating returns in the current environment.

Indeed, the most substantial holdings in the trust’s portfolio as some of the most defensive stocks around. These include Tesco, gold miner Newcrest and GlaxoSmithKline.

Management has also shown willingness to deploy extra capital repurchasing shares when they’re trading a significant discount to net at a value, which enhances returns over time.

The investment trust currently supports a dividend yield of 3.1%, is trading at an 11% discount to net asset value, and charges just 0.58% per annum in management fees.

Henderson International Income Trust

The great thing about dividend stocks is that they can give you a steady income in times of market volatility. That’s why the Henderson International Income Trust (LSE: HINT) has to feature on a list of top investment trusts to buy in the current environment.

It owns some of the most highly-regarded income stocks in the world, including Microsoft, Coca-Cola and Nestle. It currently offers a dividend yield of 3.7% and is trading at a slight discount to the net asset value.

Since the trust was launched in 2011, its net asset value as grown by nearly 90%, including dividends.

That suggests this trust can provide a steady return for investors in all marketing environments. With an annual management fee of 0.84%, it doesn’t charge the world for this performance either.

For long-term dividend-focused investors, this trust seems to tick all the boxes.

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Victorian values

This specialist global trust was formed in 1887 to give investors an efficient way to invest around the world, which gives you an enduring platform on which to build your retirement portfolio. It is around 35% invested in North America, 25% in the UK, 15% in Europe, 10% in Japan and 5% in the rest of Asia Pacific.

That looks a balanced spread and recent performance has been solid with a return of 55% over five years, against just 3.5% on the FTSE 100. However, this is below the average for its sector, investment trust global, which rose 72% over the same period.

The Scottish play

Scottish IT has just published its annual results to 31 October and rewarded loyal investors with the 35th consecutive year of regular dividend increases, up 6% this year to 21.2p, plus an additional special dividend of 4p. The current yield is only 2.52% but as you can see, management policy is progressive.

Over the year it delivered a 1.9% share price total return. Although it does not have an official benchmark, the international MSCI All Country World Index beat it, growing 3.4%. If that disappoints you, then consider these global trusts instead.

Scottish IT trust adopts a contrarian, high-conviction approach to global stock markets, focusing on stocks that are out of favour with mainstream investors, believing they offer the greatest potential for long-term gains. Value investors, in other words. This may explain recent relative underperformance, as growth stocks have held sway. However, the cycle may now be moving back in favour of value, and this could help you play the shift. It currently trades at a 9% discount to underlying net asset value. Here are another two more trusts worth looking at.

Ride this train

Lindsell Train Investment Trust (LSE: LTI) is in the same global IT sector and is up a thumping 270% over the past five years, helping to establish co-managers Nick Train and Michael Lindsell as two of the hottest properties in UK fund management.

They are much better known for their blockbuster unit trusts such as the £5.6bn LF Lindsell Train UK Equity Fund (up 67% over five years) and £5.6bn Lindsell Train Global Equity (up 144%), but as you can see, their investment trust has done even better.

Premium price

The trust is a relative minnow with a net asset value of just £810m and I wondered why, but then I noticed that it trades at a massive 44% premium to the underlying net asset value of its portfolio. Most trusts trade at discounts of up to 10%-15% of perfectly good funds, a handful trade at a premium, typically 2%-3%. I’ve never seen one anywhere near as big as this one.

This is a real testament to the popularity of its managers but I would avoid this trust as a result. Maybe you should check out the Lindsell Train range of open-ended unit trusts instead, where premiums and discounts are not an issue, and performance has been superb.

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In my opinion, this long-term focus makes them perfect assets to hold in your retirement portfolio. So today, I’m looking at two that I believe would fit well into any investors’ SIPP. 

Small-cap focus

Small-cap stocks have huge growth potential and can really turbocharge your portfolio’s performance. However, picking small-caps can be a tricky business. That’s why the Dunedin Smaller Companies Investment Trust (LSE: DNDL) is my first retirement portfolio pick. 

Over the past five years, Dunedin’s net asset value (NAV) has increased by 91%, outperforming the FTSE SmallCap Index by 7% over the same period. However, despite this return, the stock trades at a substantial 15.6% discount to net asset value. So the actual share price return over this period has lagged NAV growth. 

To try and correct this anomaly, Dunedin’s management has decided the best course of action is to merge with the Standard Life UK Smaller Companies Trust. Managed by star fund manager Harry Nimmo, this firm has a much higher profile and, as a result, trades at a discount to NAV of only 4%. 

By combining the two, investors should benefit from economies of scale, and Dunedin’s shareholders should immediately benefit from an uplift in its share price as the discount to NAV re-rates. The current management fee for the Standard Life trust is 1.1% and, over the past five years, Nimmo and team have produced an average annual return for investors of 14.4%. 

So all in all, the Dunedin Investment trust offers exposure to both small-cap growth stocks and a should see a re-rating of its shares in the months ahead as the merger with Standard Life completes. 

Contrarian play 

Another investment trust I believe could be a fantastic addition to any retirement portfolio is the Scottish Investment Trust (LSE: SCIN). 

This trust focuses on finding contrarian value investments, an approach that is designed to yield market-beating performance in all environments. 

Established in 1887, this firm has now been investing money for shareholders for more than 130 years, and has increased its regular dividend investors every year for the past 34 years, earning it the Association of Investment Companies’ ‘Dividend Hero’ status. At the time of writing the shares support a dividend yield of 2.4%. 

Long-term outlook

The managers of the Scottish Investment Trust are not overly concerned about short-term performance. They have a long-term focus, which makes this company a perfect pick for retirement portfolios. 

What’s more, the managers are unconstrained by borders and can invest in markets around the world — wherever they can find value. For example, right now a chunk of the portfolio is invested in Japanese banks. Around a third is invested in the UK and another third in North America. 

By using this approach, over the past decade the trust has smashed its benchmark, returning 218% compared to 195% for the MSCI UK All-Cap Index. It’s this track record of performance, coupled with the firm’s low annual management fee of 0.5% and long-term focus, that leaves me excited about the Scottish Investment Trust’s future potential. 

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However, here are two investment trusts which appear to be well-managed and that could therefore offer high total returns in the long run. They could continue to deliver impressive investment performances for their investors.

Strong performance

Reporting on Monday was The Scottish Investment Trust (LSE: SCIN). The company was able to deliver a mix of capital growth and income during the year to 31 October 2017. Its share price total return was 12.8%, while its net asset value per share increased by 11%. It was also able to deliver a dividend growth rate of 11.1% plus an additional special dividend of 5p. This could prove useful if inflation remains stubbornly high, although the company’s dividend yield of 1.6% remains at just over half of the rate of inflation.

Looking ahead, the company appears to be relatively cheap. It trades at a discount of 8% to its net asset value. This suggests that there could be upside potential, while the company’s holdings also seem to be undervalued themselves. This is at least partly because of the investment style adopted by the Trust. It focuses on investing in unfashionable companies which have generally been overlooked by most investors. This could provide a wide margin of safety that could translate into capital appreciation.

With a total of 54 holdings, the portfolio is now more concentrated than it was a year ago. Back then it had 70 holdings, and this suggests that there could be even less correlation between the Scottish Investment Trust and the wider stock market. Therefore, as well as relatively high returns, it could also be a means of diversifying away from the performance of the wider index.

Income potential

Also offering an upbeat outlook at the present time is the Murray Income Trust (LSE: MUT). It has a dividend yield of 4.6%, which is over 50% higher than the current rate of inflation. This should help its investors to overcome the threat of higher inflation, while a discount of 7% to its net asset value could mean that it offers a wide margin of safety. With stock markets being generally high, this could be appealing to a range of investors.

Among the Murray Income Trust’s top 10 holdings are defensive shares such as GlaxoSmithKline and British American Tobacco. This suggests that the trust’s outlook may be relatively stable. However, there are also growth opportunities through other top 10 holdings such as Prudential and Unilever. As such, it could be argued that the company offers a mix of defensive growth prospects. With its focus on UK equities, investors may continue to benefit from a weak pound in future.

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Home and away banker

Few are more venerable than the £962m Bankers Investment Trust (LSE: BNKR), founded in 1888 and now managed by Janus Henderson Investors, which published results for the half-year ended 30 April this morning. Its diversified international portfolio has delivered a total return of 120% over five years, against 100% for its global benchmark, according to Trustnet.com. The board has also increased its dividend for 50 consecutive years – that’s right, 50 – and it currently yields a steady 2.2%.

Today’s results show net asset value (NAV) up 7% over six months, pretty much in line with the FTSE All-Share at 7.1%, and an even more impressive 31.3% over 12 months, outpacing the All-Share’s 20.1%. It has been helped by the post-Brexit plunge in the pound, which lifted the value of its global portfolio when translated into sterling.

Go West

Bankers’ increased weighting to North America has helped performance, although it has been scaling back its exposure on valuation concerns and fears about the impact of US interest rate hikes on investor sentiment. It is shifting asset allocation towards continental Europe and Asia, where valuation and yields are at a relative discount.

Its European holdings grew strongly over the period, rising 9.7%, followed by China at 9.3%, impressive given that the local index fell 4.4%. Japanese and Pacific exposure floundered. The board is projecting 6% dividend growth this year, helped by its international holdings, special dividends from UK companies and the positive translation of overseas dividends into sterling. Currently, it trades at a 5.5% discount to NAV and the annual charge is just 0.45%. You can buy this trust and largely forget about it, until you need retirement income.

North of the border

The £1.8bn Caledonia Investments (LSE: CLDN) is another golden oldie, tracing its history back to the shipping empire established by Sir Charles Cayzer in 1878. Today, the Cayzer family still owns just under half of the share capital. It is up 120% over five years and 28% over 12 months, Trustnet shows, and also boasts the proud record of increasing its dividend for 50 consecutive years. Currently, the yield is 1.93% and is trading at an even wider discount of 16.81% to NAV. However, it does have a relatively high ongoing charge of 1.14%.

The £843m Scottish Investment Trust (LSE: SCIN), founded in 1887 has offered 33 years of consecutive dividend growth and currently yields 1.67%. Its five-year total return is a robust 97%, and 26% over 12 months. The trust currently trades at a discount of 8.33% to NAV, with ongoing charges of just 0.59% a year.

Global reach

Bankers and Scottish have large UK and US exposures, which combined, account for roughly half of each trust’s global exposure, but this falls to just 10% for Caledonia. Together these three trusts could give you all the diversification you need.

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